Car insurance (also popularly referred to as motor insurance, auto insurance, medical insurance or GAP Insurance) is insurance taken for a road vehicle such as, cars, motorbikes, heavy vehicles, or any other vehicle. The fundamental use of car insurance is to provide the owner of the vehicle with financial security against any physical harm, damage or injury due to collisions on the road as well as against liability that could take place, due to an accident/collision.
Depending upon a particular location or region, the exact terms and conditions of a car insurance policy is varied according to the legal regulations of that particular place. In some cases, a car insurance policy can also offer additional financial guarantee against larceny of the car and possibly casualty to the vehicle, caused by incidents other than traffic accidents.
Another extension of car insurance, known as auto repair insurance, deals with the run-of-the-mill damage sustained from continuous use of a vehicle, irrespective of impairments concerned with a car accident. However, this particular extension of car insurance does not cover if the vehicle has suffered damage due to an accident, due to a natural disaster, or due to vandalism. Auto repair insurance has become an extremely attractive alternative for protecting one's vehicle, especially if the warranties on the vehicles have expired.
Car insurance schemes were first initiated in UK with the passing of the Road Traffic Act in 1930. This system ascertained that all vehicle holders and drivers had to be covered or protected for their liability for physical harm or demise to third parties, while their car was being driven on any public route. Germany also followed suit in 1939.